Basic net income (loss) per share is calculated by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common stock and common stock equivalents outstanding for the period.

Holders of Series E convertible preferred stock met the definition of participating securities, which required the Company to apply the two-class method to compute both basic and diluted net income (loss) per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. In the event the Board of Directors declared dividends or any distributions, the available distributions would be distributed (i) first, to the Series E convertible preferred stock until such holders have received on a cumulative basis an amount per share equal to the Series E original issue price, and (ii) second, to the holders of common stock and Series E convertible preferred stock (on an as converted basis) on a pro rata, pari passu, basis. The attribution of earnings to the Series E convertible preferred stockholders was based on its contractual rights to receive dividends and, for the quarter in which they converted, the attribution was calculated using a weighted-average method. The Series E convertible preferred stock did not contractually participate in the Company’s net losses, and therefore, undistributed losses were not allocated to Series E convertible preferred stock. Immediately prior to the completion of the Company’s IPO on September 22, 2021, all outstanding shares of the Series E convertible preferred stock automatically converted on a one-to-one basis into an aggregate of 27,011,500 shares of common stock. See Note 12 for additional information related to the Series E convertible preferred stock.

The dilutive effect of stock options, warrants, and unvested nonparticipating restricted stock is based on the treasury stock method while the dilutive effect of the convertible preferred stock is based on the if-converted method. These potential common stock equivalents are only included in the calculations when their effect is dilutive. The Company presents the more dilutive of the two-class method or if-converted method as diluted net income (loss) per share during the period. For the three months ended March 31, 2021, the Company presented diluted net income per share under the two-class method.

The following table presents information necessary to calculate net income (loss) per share:


	Three Months Ended March 31,
	2022		2021
Numerator:
Net income (loss) attributable to Thorne HealthTech, Inc.	$	4,979,059	$	4,706,490
Undistributed earnings attributable to Series E convertible preferred stockholders	N/A			(4,706,490	)
Numerator for basic EPS—net income (loss) available to Thorne HealthTech, Inc. common stockholders (A)		4,979,059		—

Effect of dilutive securities:
Undistributed earnings attributable to Series E convertible preferred stockholders—basic	N/A			4,706,490
Undistributed earnings attributable to Series E convertible preferred stockholders—diluted	N/A			(4,706,490	)
		—		—
Numerator for diluted EPS—net income (loss) available to Thorne HealthTech, Inc. common stockholders (C)		4,979,059		—

Denominator:
Denominator for basic EPS—weighted average shares (B)		52,564,779		17,650,035

Effect of dilutive securities(1):
Stock options		60,172		—
RSUs		—		—
Warrants		—		—
Dilutive potential common shares		60,172		—
Denominator for diluted EPS—adjusted weighted average common stock and common stock equivalents (D)		52,624,951		17,650,035
Basic EPS (A/B)	$	0.09	$	—
Diluted EPS (C/D)	$	0.09	$	—

(1)

Approximately 16.1 million warrants and stock-based awards were excluded from the computation of diluted EPS for the three months ended March 31, 2022, because the effect would have been anti-dilutive under the treasury stock method.